How to succeed in real estate investing? After years of increases , the subject of real estate investment interest to many investors and is being debated . Many would like to buy but are afraid to make a mistake, paying too much to buy at the top of bubbles, in short, not a successful real estate investing. Understandably, because it is virtually the only investment that requires a lot of money to invest again, unable to spread its purchases over time to minimize the risk of bad timing.
About the criteria for real estate investment , I read two great trend s. On the one hand, those supporters of a single criterion: location, location and location . On the other hand, those with extension lists , like “the 15 criteria for a successful real estate investing “…
For my part, there is neither 1 nor 15 criteria to analyze the appropriateness of a real estate investment. There is only 2, but these two are absolutely necessary (and apply to both a rental investment as a principal residence):
1. Location, location, location
This formula repeats 3 times the word “location” is often understood as an insistence on the importance of the site. This is partly true, but not only because there are different ways of looking at the site.
1.1 Location = city
should buy property in a city where there is demand for the property (purchase & lease). Yes, but if it is for a primary residence you will say, I have no choice in town! True, but there are goods that remain tight supply-demand balance , including in cities in population decline or not recommended for rental investments in small area. For example, in the towns of the province where the apartment market is sluggish, that of the adjoining houses with no land often remains very buoyant … So b ien choose a couple type of property / city playing on the one or the other of the two parameters according to your opportunities / objectives .
1.2 Location = the district
’s review of the criteria of profitability should not lead you to take advantage of lower prices in neighborhoods disreputable or whose reputation is deteriorating (even if you think this degradation temporary or unfair or exaggerated). You will regret it for the most part, believe me!
1.3 Location = exact situation in the area.
For two apartments at the same address , do not you think that the 4th floor courtyard still worth significantly highest price that the ground-floor street?
For two flats in the same subdivision , is there no straight line between a house of Longchamp with South facing terrace overlooking a grove and a north facing terrace and view of an island rental of two floors? Similarly, between a house and adjoining non-attached …
2. Performance (including a principal residence)
The idea here is to measure the gross rental yield is to say the ratio of the annual rent which can reasonably rent your property (which can be added gain tax exemption in the case of an investment rental tax exemption) by its purchase price. I stress even if it’s a primary residence , I said the rent which you may reasonably and not rent the property you are going to rent it!
Regarding the condo, keep the point of care charges that should not be excessive (what seems to be the case if they represent more than 20% of the rent excluding charges)
It is then that we will make the difference between residence and rental investment on the gross rental yield necessary. The criteria are indeed tough + for a rental investment due to the risk of vacancy, deterioration, and especially a lot + negative tax, since even with a credit you’ll always be one day be taxed on income received
2.1 Case of a principal residence
must have gross rental yield> 6% for an investment with
OR (gross rental yield – rate credit TEG)> 2% for an investment with a majority share of credit
2.2 Instances of a rental investment
must have gross rental yield> 8% for an investment with
OR (gross rental yield + performance bonus potential tax exemption – APR credit rate)> 3.5% for an investment with a majority share of credit
This system ensures maximum protection against future potential hazards of the real estate market . And these criteria can be met regardless of the time … even now with real estate prices have doubled + in the last decade ! … certainly looking good !